Earnings call transcript: Altus Group Q3 2025 sees EPS double, stock drops

Altus Group reported its Q3 2025 earnings, revealing a significant improvement in its financial performance with adjusted earnings per share (EPS) doubling to $0.38. Despite this, the company's stock fell by 4.4% in after-hours trading, closing at $56.10. The market's reaction followed the company's moderated guidance for 2025 revenue and EBITDA, which may have tempered investor optimism despite the robust quarterly results.

Key Takeaways

• Adjusted EPS doubled to $0.38, reflecting strong operational performance.
• Revenue increased by 2.2%, with recurring revenue up 5.2%.
• Stock dropped 4.4% post-earnings due to moderated guidance.
• Strong cash position with CAD 405.1 million and reduced debt levels.
• Ongoing product innovation with new launches and strategic focus on software and analytics.

Company Performance

Altus Group showcased a solid performance in Q3 2025, with a notable expansion in its profit margins and a substantial increase in adjusted EBITDA by 16.1% year-over-year. The company's focus on recurring revenue streams and operational efficiencies contributed to these gains. The broader commercial real estate market also showed signs of recovery, aiding Altus Group's growth trajectory.

Financial Highlights

• Revenue: $134.47 million, up 2.2% year-over-year.
• Earnings per share: $0.38, doubled from the previous year.
• Adjusted EBITDA: Rose 16.1% year-over-year.
• Cash from operations: Increased by 22.8%.
• Free cash flow: Increased by 36.5%.

Earnings vs. Forecast

Altus Group's adjusted EPS of $0.38 fell short of the analyst forecast of $0.4433. This slight miss, coupled with moderated guidance, likely influenced the negative market reaction. The company's revenue forecast of $134.47 million was in line with expectations.

Market Reaction

Following the earnings announcement, Altus Group's stock fell by 4.4% in after-hours trading. This decline contrasts with the company's 52-week high of $63.07, reflecting investor concerns over the revised guidance despite the strong quarterly performance.

Outlook & Guidance

Altus Group has moderated its revenue and EBITDA guidance for 2025, citing a strategic focus on accelerating product adoption and profitability. The company anticipates market acceleration in 2026 and plans to detail its value creation strategy at an upcoming Investor Day.

Executive Commentary

Mike Gordon, Executive Chair, emphasized, "Altus Group is at a critical inflection point," highlighting the company's strategic initiatives to drive shareholder value. CFO Pavan noted, "We are seeing positive signs of activity," reflecting optimism about future market conditions.

Risks and Challenges

• Economic Uncertainty: Fluctuations in the global economy could impact commercial real estate investments.
• Competitive Pressure: The need to maintain a competitive edge in software and analytics.
• Market Sentiment: Investor reactions to guidance revisions may affect stock performance.
• Operational Costs: Managing restructuring costs and operational efficiencies.
• Regulatory Changes: Potential impacts from changes in real estate regulations.

Q&A

During the earnings call, analysts focused on Altus Group's leadership transition and strategic review process. The company's migration strategy for Argus Intelligence was also a topic of interest, with management addressing the rationale behind guidance revisions.

Full transcript - Altus Group Limited (AIF) Q3 2025:

Pavan, CFO, Altus Group: Thank you for standing by. At this time, I would like to welcome everyone to the Altus Group's third quarter 2025 financial results conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Camilla, Chief Communications Officer. You may begin.

Camilla, Chief Communications Officer, Altus Group: Thank you, Operator. Hi everyone, and welcome to the conference call and webcast discussing Altus Group's Q3 results for the period ended September 30, 2025. Our press release, MD&A financial statements, and the slides accompanying our prepared remarks are all available on our website, and as required, have been filed to SEDAR+ after market close this afternoon. In conjunction with our earnings release this afternoon, Altus Group also announced that our CEO, Jim Hannon, has departed the company effective immediately. Mike Gordon, Altus Group's former CEO and director since 2020, has been appointed Executive Chair effective immediately and has agreed to assume the CEO role in Q1 2026. Concurrently, Rayne Nicholas is stepping down from the chair role and remaining on the board as a director. The press release can also be found on our website. I'm joined today by Pavan as well as Mike Gordon.

We also have Rich Sarkis, the President of Software and Data, joining us for the Q&A portion of the call. Some of our remarks on this call and in our disclosure may contain forward-looking information that is based on certain assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our forward-looking disclaimer in today's materials. Please be reminded that Altus Group uses certain non-GAAP financial measures, ratios, total segments measures, capital management measures, and supplementary and other financial measures as defined in National Instruments 52-112. We believe that these measures may assist investors in assessing an investment in our shares as they provide additional insight into our performance.

We use our caution that they are not defined performance measures and do not have any standardized meaning under IFRS and may differ from similar computations as reported by other entities, and accordingly may not be comparable to those financial measures as reported by those entities. These measures should not be considered in isolation or as substitutes for financial measures prepared in accordance with IFRS. An explanation of these measures is detailed in today's IR materials. I would also like to point out that unless otherwise specified, all the percentage and basis point growth rates we refer to on this call today will be on a constant currency basis over the same period in 2024. I'll now turn it over to Mike Gordon.

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: Thank you, Camilla. Hello, everyone. Before we discuss our results, I want to take a few moments to address the leadership changes we announced earlier today, as well as the conclusion of our strategic review. On behalf of the board, I want to thank Jim for his contributions to the company, as well as to Ray for his years of service as the Chair as he transitioned into a director role. Their leadership, vision, and tireless efforts over the past several years have established a strong foundation. Jim has played an integral role in positioning Altus Group for the opportunity as a pure-play software, data, and analytics platform. During his tenure, we successfully strengthened our platform, we refined our market approach. We improved how we are going to operate across the business.

As Altus Group ventures its next growth phase, our focus shifts from operational build-out to accelerating market adoption of our new product innovations and improving our profitability and focus across the businesses, making this the right time for a leadership change that aligns with Altus Group's future needs. I look forward to carrying the momentum forward and accelerating the pace of progress as I step into the Executive Chair and eventually the CEO role. Now, let me touch briefly on the conclusion of our strategic review. The board undertook a disciplined and thorough strategic review process, as we periodically do, to evaluate potential options for maximizing the shareholder value of our shareholders. The company engaged in a fulsome review, which included consideration of a wide spectrum of strategic alternatives, including soliciting interest from potential acquirers.

After careful consideration of these alternatives, including reviewing multiple proposals, the board determined that remaining independent and continuing to execute and accelerate its strategy is the best path forward for Altus Group and to maximize the value for its shareholders. The company has undergone significant business transformation in recent years to operate more efficiently and transition into a pure-play CRE, Software, Data, and Analytics platform. Altus Group is in the early stages of its new product cycle as market conditions strengthen and the benefits of its operational and strategic transformation are beginning to take hold. Our board believes that these factors present considerable upside potential for the company's shareholders in the periods ahead. The strategic review gave us tremendous insight and reinforced confidence in our value creation plan.

We came away with clear priorities and a strengthened conviction of what needs to be done and how we need to execute to accelerate our momentum. Altus Group is at a critical inflection point, and I'm excited to execute on this opportunity for our shareholders. The team is really looking forward to taking all of you through our value creation plan at our upcoming Investor Day on November 20th. Among other things, we're planning to introduce new financial disclosures and walk you through the growth and profitability algorithm of our midterm goals. I hope you all can join us. I'll now turn things over to Pavan to dive into our quarterly results.

Pavan, CFO, Altus Group: Thank you, Mike. I want to firstly thank Jim and Ray for their leadership and contributions. The foundation they built will continue to guide our execution and drive value for shareholders. Let me start with a few key highlights from the quarter. These include sustained growth in recurring revenue, improved operating leverage, and strong cash flow generation. Recurring revenue was up 5.2%, anchored by the strength of Argus Intelligence, which delivered double-digit growth for a second consecutive quarter. Consolidated revenue grew by 2.2%, tempered by softer performance in the Appraisals and Development Advisory segment and the impact of our ongoing portfolio simplification. For the fifth quarter in a row, we delivered consolidated margin expansion. Consolidated margins grew by 230 basis points to 19.2%. Year-to-date margins are up 440 basis points. Profit from continuing operations increased meaningfully, underscoring the quality of our earnings. Adjusted EBITDA rose 16.1% year-over-year, driven by.

Top-line expansion of Argus Intelligence and operating improvements in analytics as we continue to optimize the portfolio. Adjusted EPS came in at $0.38, doubling from the prior year as a result of both higher profit and lower share count following our buyback program. Cash provided by operating activities and free cash flow were up in the quarter on an as-reported basis by 22.8% and 36.5%, respectively. These are strong results considering the comparative period still had contribution from the divested property tax business. Most notably, free cash flow per share was up 45.7%. Our operational improvements and ongoing portfolio simplification are translating to higher quality earnings compared to a year ago. This has been and will continue to be a driver of cash flow improvements. During the quarter, we took further action to right-size Altus, reducing headcount and terminating leases and other contracts.

In the quarter, we recorded $6.6 million in restructuring costs. Turning to the analytics business segment, our revenue performance came in line with our guidance expectations and outperformed on margin expansion. As a side note, as we talked about in a couple of calls, we're no longer reporting on new bookings as we plan to roll out new KPIs at our upcoming Investor Day here shortly. Recurring revenue is a key metric for our performance. For our second consecutive quarter, Argus Intelligence was up double digits, reflecting strong renewals on the platform and good traction with our new pricing model. GMS delivered moderate growth, anchored by strong client relationships and pricing trend. With CRE sentiment improving, we're well-positioned as momentum builds. Both businesses continue to exhibit low churn with net revenue retention levels above 100%. Margins continue to expand, increasing by 250 basis points this quarter and year-to-date.

The improvement reflects a combination of factors: revenue growth, ongoing portfolio optimization, enhanced delivery efficiency through our global service center, benefits from restructuring initiatives, and disciplined expense management. Turning to the Appraisals and Development Advisory segment, revenue and adjusted EBITDA were down, reflecting softer market conditions across both businesses. The appraisal business, which operates exclusively in Canada, was particularly impacted by the ongoing tariff uncertainty, inflationary pressures, and evolving monetary policy. Turning to the balance sheet, we ended the quarter with CAD 405.1 million in cash and CAD 157.2 million in bank debt, resulting in a funded debt-to-EBITDA ratio of 1.21. As a reminder, we fully executed our NCIB last quarter, retiring approximately 3.3 million shares and reducing our outstanding share count to 43.2 million. Year-to-date, we've returned CAD 178 million to shareholders.

With a strong net cash position and consistent free cash flow generation, we continue to view buybacks as an effective way to return capital. We look forward to sharing more on our capital allocation plans at Investor Day. With respect to our fiscal 2025 business outlook, we're refining our full-year guidance ranges to reflect current expectations. Notably, we're taking a more conservative view on revenue and, given the ongoing softness in appraisal and debt advisory segment, we're moderating our view on consolidated adjusted EBITDA margins. In the analytics segment, we're slightly moderating our revenue range. GMS continues to build momentum, supported by strong client engagement and a healthy pipeline, but the broader acceleration is expected to extend into 2026. We remain confident in the trajectory and opportunity ahead. Argus Intelligence continues to perform well and remains a consistent bright spot.

We're seeing growing optimism across our client base, market activity is picking up, capital is becoming more accessible, and valuations are rebounding, with Q3 asset values showing double-digit gains across all major CRE sectors. It's a really strong setup heading into next year. With that, the team is once again really looking forward to taking you through our value creation plan at our upcoming Investor Day on November 20th. Before we take questions, I want to thank our employees for an exceptional quarter and for the ongoing work to finish the year strong. Okay, operator, let's open the lines up for questions now, please.

Speaker 1: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from Stephen McLeod with BMO. Please go ahead.

Stephen McLeod, Analyst, BMO: Thank you. Good afternoon, everyone.

Speaker 1: Hi.

Stephen McLeod, Analyst, BMO: Welcome back, Mike. I guess just a couple of questions. Maybe for Mike and the team, just with respect to the CEO change and you stepping into the role beginning in Q1. Just curious if you can give a little bit of color around, I mean, I guess the biggest question is, why now?

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: Hey, Stephen. It's good to hear from you again, and I'm glad to be back on these calls with you. I think why now is that we looked at what we were trying to do in creating a new value creation plan, what that plan would look like over the next three to five years. What we were trying to make sure is, as we were starting to shift and accelerate what we were trying to do, is make sure that we were all aligned. As a result, as we talked about this at the board level, for instance, Ray has always sat back and said to me that he's got a couple of years left and he felt that this would be the right time to move on.

As we also talked with Jim, we just came to the same conclusion, and that was how we jumped into this as we were going to enter into 2026. As we go through into the Investor Day, we felt pretty good about where everything was with the value creation plan, and we want to talk with that to all of you, of course. We just decided that this is best for the company and best for all the individuals.

Stephen McLeod, Analyst, BMO: Okay. That's helpful. Thanks, Mike. Maybe just with respect to the strategic review and one of the things that sort of—I guess my question is twofold. One is, can you give a little bit of specifics around why remaining a standalone business is the right thing? What were the key characteristics that you looked at? Maybe secondly, along those lines, with respect to the portfolio simplification that you're going through, how does that roll into kind of the outlook over the next few years?

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: Two good questions. To the strategic review, we had a framework in which we were looking at everything because what we were trying to do is get a good sense of we knew strategically what we wanted to build, how we wanted to start to execute, and how we wanted to accelerate across things. Given truly just the interest as a whole in our business, we wanted to make sure that we did a full review. We did. As we looked through things, we felt that it was better to stay as a standalone business because we felt like we could execute and deliver more value for our shareholders through that execution in the short term and in the medium term so that we could actually put that forward. As to the portfolio simplification.

We started that last year, and we were planning on really working through that very quickly as we enter into 2026. Again, good discussion for a couple of weeks from now, but we are, as I said, a software data and analytics platform, and that's how we're looking at the business.

Stephen McLeod, Analyst, BMO: Okay. That's great. Thanks, Mike. I'll leave it there and cue back up. Appreciate it.

Pavan, CFO, Altus Group: Thanks.

Speaker 1: Your next question comes from the line of Gavin Fairweather with Cormark. Please go ahead.

Gavin Fairweather, Analyst, Cormark: Oh, hey, good afternoon, and thanks for taking my questions. Nice to reconnect, Mike, and happy to hear that Altus is staying public. Nice to hear. Maybe just firstly for me on Argus Intelligence and the rollout, nice to hear about the double-digit growth there. Last quarter, you did talk about the pricing that you were achieving on renewal. Maybe you could give us an update on how your results are tracking versus your 15% target there.

Pavan, CFO, Altus Group: Yeah. Look, as we mentioned. Argus Intelligence is going through a very meaningful migration and upgrade pattern, and Argus Intelligence is performing extremely well. From a growth perspective, we're seeing high double-digit growth in Argus Intelligence. High double-digit growth in our ARR. As I mentioned, our net revenue retention, which is a function of cross-sell and upsell activities, is well north of 100%. Even from a pure retention perspective, we're having great client and lower retention as clients are going through a change. Highlighting very strong renewals of our customers. It's showing the benefit of our price increase, which the clients are absorbing and translating to very high customer revenue and lower retention. We're roughly 56% of the way through the migration to Argus Intelligence. I would say roughly about 70% of that is landing as seat-based.

30% of that is landing as asset-based, and they are both coming with pretty meaningful price increases. One, it is a good proof point that it is delivering what the clients are looking for. Two, gives us a very long tail to continue to drive adoption and flip more clients over to asset-based over time.

Gavin Fairweather, Analyst, Cormark: That's super helpful. I appreciate it. Just secondly, for me on analytics margins, they just continue to surprise to the upside here. I know you got your 35% target for next year, which the business is getting pretty close to here in the Q3. I am curious, when we get into a cyclical recovery, I mean, there should be some nice margin tailwinds. Is there anything preventing margins in analytics from kind of pushing higher than that 35%, like specific areas where you might want to reinvest for growth?

Pavan, CFO, Altus Group: Yeah. Look. We've talked about for quite some time that there are multiple paths for margin improvement for this business. And so we continue to execute on that. We're very pleased with a 440 basis points expansion year to date on a consolidated level. To your point, Gavin, the 250 basis points that we're getting year to date from the analytics. Obviously, it's a function of the fact that we're continuing to grow both total and recurring revenue despite the fact that we're in a challenged commercial real estate market environment. Obviously, there are a lot of signs of that dying, but in the current market environment, for us to be able to print the level of growth that we're generating is pretty phenomenal in my book. We've also highlighted the fact that we continue to focus on portfolio simplification.

Just proof of that with the disposal of the fair rates guarantees business last year. We are also consciously exiting the services business where we implement non-Altus products, as well as exiting some nonprofitable businesses in Canada associated with the appraisal business. Despite that revenue headwind, we continue to be able to print very solid consolidated revenue growth and recurring revenue growth. That is a great news story for us. Obviously, I highlighted in the prepared remarks the notion that we continue to right-size Altus. We are going through a pretty large restructuring. We also have a very large focus on G&A, which we will talk a lot about at Investor Day upcoming to make sure that we can continue to rationalize both our span and our real estate footprint. We continue to leverage the GSE. I think roughly 15% of our employee base now.

In terms of total headcount, is sitting in the GSE. As you guys will hear from us at Investor Day, we're going to continue to push on that. Gavin, it's a great question. We're very proud of the margin improvement that we're delivering. There's a lot of opportunity ahead of us to continue to do that. We look forward to talking to you about that on the 20th.

Gavin Fairweather, Analyst, Cormark: Thanks so much. I'll pass the line.

Pavan, CFO, Altus Group: Gavin.

Speaker 1: Your next question comes from the line of Erin Kyle with CIBC. Please go ahead.

Erin Kyle, Analyst, CIBC: Hi. Good evening. I wanted to ask a question just on the guidance revision here. You turned fiscal 2025 guidance last quarter, and then we've taken it again this quarter. I just want to dig into that a little bit. I know last quarter, the guidance cut was due to the slower BMS activity. Sounds like the answer to this is no, but are you seeing any softness in ARGUS Intelligence sales? And are you still seeing that 20% yield on pricing that you mentioned last quarter? Or how should we think about the guidance revision for 2025?

Pavan, CFO, Altus Group: Yeah. Look, we've got 60 days left to go in the year and the quarter. Obviously, we want to try to narrow the range down as much as possible with everyone. As it relates to the guidance, I'm going to just, again, I'm not overly concerned with the guidance concern. The reason for that is, one, Argus Intelligence continues to fire on all cylinders, as we mentioned in some of the prepared remarks. As I just highlighted in regards to the ARR, NRR, and GRR growth that we're seeing in that business. We did allude to the fact that there is a pricing uplift on the conversion. On a blended basis, we're seeing about a 16% price increase. Seed is about 10%. Asset-based is about 30%. Very good price absorption.

When you match that up with the strong net revenue retention and strong gross revenue retention, it tells the clients understand the value that's being delivered. That is a very positive story. From an analytics, just to round out the story, the other big component, the other big core franchise is VMS. We've talked about that a few times in the sense that our VMS revenue is predicated on our clients deploying assets. Given the fact that we are seeing still some tepidness in regards to asset deployment, we're not seeing that inflection in VMS. With that said, we have a very healthy pipeline. We have a growing backlog. We do see that this opportunity is extending into 2026. Therefore, we're just right-sizing the guidance for 2025, with the inflection carrying into 2026. Appraisals and development advisory is.

Lower than we had anticipated from a top-line perspective. The team has been doing a phenomenal job in executing what we said we wanted them to do in terms of driving more profitable growth. That top-line does have an impact on consolidated revenue. It is just math. Again, the premise that the guidance was to really help both the Q4 and the full years do the math for you guys and give you a view of where we see things are playing out. Again, like I said, there is a lot of optimism in regards to where we are from a product roadmap and a commercialization perspective. The CRE market is high. We are seeing positive signs of activity. Asset values have seen double-digit gains across all major sectors on an annual basis in Q3. Cost and availability and capital continue to improve.

As I said, dovetails into an easing monetary policy. Picky report, but as a Q3. Frequent is estimating that the dry powder for commercial real estate stands at approximately $395 billion globally. We are seeing transaction volumes starting to trend in the right direction, albeit still down. Low single digit year over year. It is up on a sequential basis. As the market continues to signal price stability and we are seeing favorable rate trajectories, these all position us well to accelerate the market adoption of our new product innovation. We are really excited about 2026 and finishing the year off strong.

Erin Kyle, Analyst, CIBC: Okay. That's helpful color on the guidance. Maybe if I can just follow up with another question on the strategic review and the conclusion there. You mentioned it was wide-ranging and considering several options, including the solicitation of offers. Maybe to the extent that you can comment, were valuations that you were seeing throughout the process in line with what you would have expected? Or, yeah, anything you can add there for additional color would be great.

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: Yeah, sure. I mean, as I said, I think that with the review that we did, and we looked internally and looked externally, and we also tried to look at many different options there. We did get things that were, I would say, pretty good when it came to the standpoint of valuations. To be honest, as we looked at our framework and how we were evaluating that and how we would execute going forward and what the team believed, we felt that there was more value that we could drive for our shareholders. As we sat down as a board, it became evident that we knew what that execution plan would be. We knew how we would take advantage of Argus Intelligence, as Pawan has said, and how we were going to start to really think about the business as we're going to accelerate.

We moved forward with the game plan as we did, and we know what we are marching towards over the next three to five years.

Erin Kyle, Analyst, CIBC: Okay. Thank you. I will pass the line.

Speaker 1: Your next question comes from the line of Paul Traber with RBC. Please go ahead.

Gavin Fairweather, Analyst, Cormark: Thanks very much. Good afternoon. Just a couple of questions for Mike. Just on the value creation plan that you mentioned. You said that you wanted everyone to be aligned. Is that plan, that the Go-Forward Value Creation Plan, does that differ from what the company has messaged to investors over the last couple of years?

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: Hey, Paul. No, not necessarily. What I would say is that I think we're looking at an acceleration of that plan. I think that as we have gone through things over the last couple of years, we have been, I mean, and to be fair, the team has been working very methodically on trying to change the business and really get it started to be focused towards being more of that software and that data and analytics business, which in a lot of ways is a pretty good size lift. I think as we are looking forward, when I get back to the alignment, is now that we feel like we have the pieces and parts, now it's going to be adding those in faster so that we can get a faster groove.

As we look at things like on where do we want to continue to invest and grow, we have a good perspective on that. As Pawan said, we are looking to really look at how we can increase profitability. We have been doing that consistently, but we think that we have a. We feel like we can really work on that as well. When I look at things in just execution plans, it is just really putting yourself out there in a couple of years and working yourself backward per quarter to see how you are going to really get customers' value and how they are going to adopt our products. We have been really talking about that and trying to create a. Quantitative value prop for our customers. Our customers are seeing what that could be.

I think from our view, that's the alignment that you get to. It's not an alignment of person's thought processes, but it's more on how we're going to execute.

Gavin Fairweather, Analyst, Cormark: Okay. That's helpful. Second question, just on the strategic review, does the board see possible divestitures and/or acquisitions as part of the value-creating strategies going forward here?

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: Good question. I would say the answer on the divestitures is we're always looking at that. We will talk about that on November 20 and at the Investor Day. I would say that we're going to be focusing on driving value back to our shareholders in the nearer term. We think that we have the pieces and parts in place. Certainly, if there's something that is out there that becomes interesting to us, as we've done in the past, we'll consider it. Right now, we really think that we're going to be focusing on driving the value back to our customers in the short and medium term.

Gavin Fairweather, Analyst, Cormark: Okay.

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: I'm sorry, investors.

Gavin Fairweather, Analyst, Cormark: Yeah.

Speaker 1: Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from Richard C with National Bank Capital Markets. Please go ahead.

Richard C, Analyst, National Bank Capital Markets: Yes. Thank you. Welcome back, Mike. I had a question also on the strategic review. You said that you had some inbounds that were pretty good. At what valuation would you consider or would you have considered pursuing those strategic options?

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: That's something that is between us and the board. We looked at a variety of things. As we were walking through what we were seeing from the market, we're very happy at how people made a lot of time to take a look at us, and we spent time with them. At the end of the day, we felt like we could drive a lot more value for our shareholders in a short-term and a medium-term consequence. That's how we just went through it.

Richard C, Analyst, National Bank Capital Markets: Okay. Fair enough. As you come into the job here early next year, is it fair to sort of ask you what your top one or two operating initiatives are going to be in terms of priorities for 2026? Or should we wait till you're actually in that job?

Mike Gordon, Executive Chair, Incoming CEO, Altus Group: I think it's fair. It's early, so I appreciate you just getting right down to it. I would tell you the following. When I look at just our execution and how we can accelerate that execution, that's really what I want to get down to on this. In talking to the team and talking to the board, it's been a focus for all of us so far. That's, again, one of the reasons why we look strategically at our options. I also think as we look through this and to where Pawan has talked, we have a lot of opportunity to really continue to get the good growth with our core franchises. We really want to accelerate that growth as well as accelerate the profitability. I think as we go on this, what I would call, march with the team, we think that.

We're really going to line up to this so that we can be a very good and strong-growing software company.

Richard C, Analyst, National Bank Capital Markets: Okay. Great. Thank you. I'll pass the line.

Speaker 1: Your next question comes from the line of Kevin Krishnaratne with Scotiabank. Please go ahead.

Stephen McLeod, Analyst, BMO: Hey there. Good evening. Thanks for taking the question. I've just got one. I think you mentioned that you're 56% on the way through the Argus Intelligence migrations. I'm wondering if you can comment on adoption of the various different packages. There's the core, Portfolio, and Benchmark Manager. I'm wondering if you can give any update on how those are trending. Are they within your expectations? And maybe I'll follow up after that.

Pavan, CFO, Altus Group: Yeah. Kevin, great question. Maybe I'll start the answer, and then I'll hand it over to Rich Sarkis who heads that up. As you know, Benchmark Manager, Portfolio Manager, a big add-on that we brought on board with ARGUS Intelligence. We just recently launched it. We're seeing a very healthy pipeline. We expect a fair number of clients to be closed by the end of the year in addition to the clients that we have today. The first iteration of Benchmark Manager was designed with the voice of the customer in mind, where we literally have the lead product manager sit on VMS quarterly reviews with clients to be able to create a scenario that can mimic the benchmark analysis that we provide clients through that VMS process.

We're also leveraging that technology internally, as you guys heard in the past, in terms of project one, where we're just driving greater efficiency within our business. As the biggest customer of our own product, using that innovation that comes out of our own use to bring that to the marketplace. Look, in order for clients to have access to Benchmark Manager, and we've mentioned this in the past, they do have to move their models to the platform. There is some work the client has to do. We are leveraging our own automation capabilities through the Altus ID and Reonemi ID to help facilitate that. As part of the continuing involvement of the product, we are adding more MSAs and more cities to the view. We're expanding the property subtypes. We just had a large release recently, and we continue to add more property subtypes.

Punchline, Kevin, is we're iterating fast based on a kind of a full circle of continual feedback loop from our early clients that continue to evolve the product. That gives us a lot of upside in the sense that our sales team has a great opportunity to stay engaged with clients and continue to build a pipeline, not only as they, one, migrate to Argus Intelligence, but now the opportunity to follow that on with the add-ons that we're continuing to bring more and more to the platform. That gives us a pretty long runway in terms of opportunity and growth, both from a new logo perspective but also from a price-value perspective as well, too. Rich, I don't have—yeah. I think you covered that really well. I think the two points I underscore are, one, the rapid pace of iteration, right?

Real modern software development and not iteration done in a vacuum. This is with both the internal and external voice of the customer. Obviously, with our several hundred VMS practitioners providing us that voice of the market internally, but also spending a lot of time with customers who have the core Argus Intelligence product, previewing Portfolio Manager and Benchmark Manager with them and getting that feedback that has informed our roadmap. The second piece is really around thinking about the core Argus Intelligence product that, as Pawan mentioned, is having really strong traction as the launching pad for future upsells and cross-sells for Portfolio Manager and Benchmark Manager, both of which would require a move to asset-based pricing. I think we're just really starting to scratch the surface around that asset-based pricing uptake as well in 2026 and beyond.

Stephen McLeod, Analyst, BMO: Thanks for that very comprehensive answer. I'm wondering, do you think that the Benchmark Manager, is it something that will be valuable to both your largest customers and the smallest, or is it something that might only be adopted by large? I'm just trying to understand where you think. What type of customers might be the best suited for the product? Or is it kind of something that you think over time can be beneficial to big, large, and small?

Pavan, CFO, Altus Group: That's a great question. I think the answer is both. For the larger ones, this is a great complement to some of the benchmarking insights that they are currently getting from our VMS colleagues on a quarterly basis. With Benchmark Manager, that really brings it to life and allows that intra-period inspection and diving into the benchmarking trends, which really brings those benchmarking reports to life. For the smaller and medium ones, there's almost like a democratization of benchmarking where now it is available for those who have perhaps a smaller portfolio or different types of assets and different pricing models that they are looking for. The Benchmark Manager software really unlocks that capability for them, whereas previously, they might have been sort of not able to get that type of capability.

Stephen McLeod, Analyst, BMO: Thank you.

Speaker 1: There are no further questions at this time. I will now turn the call back over to Pawan for closing remarks.

Pavan, CFO, Altus Group: Yes. Thank you again, everyone, for joining us on this call this evening. As always, please do not hesitate to get a hold of us through Camilla or Martin if you have any follow-up questions. With that, I will conclude the call and look forward to seeing everyone at Investor Day.

Camilla, Chief Communications Officer, Altus Group: Thank you.

Speaker 1: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

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